March 5, 2012
U.S.

Bingaman floats long-awaited ‘clean energy’ bill

By Hannah Northey • E&E • Posted: Monday, March 5, 2012 via: governorswindenergycoalition.org 5 March 2012

Sen. Jeff Bingaman (D-N.M.) today unveiled legislation aimed at boosting the nation’s reliance on low-carbon energy sources and to help meet President Obama’s goal of generating 80 percent of the country’s electricity from “clean energy” sources by 2035.

The chairman of the Senate Energy and Natural Resources Committee touted his Clean Energy Standard, or CES, legislation as a way to create a transparent framework where clean energy can compete with traditional energy sources and then “gets out of the way and lets the market and American ingenuity determine the best paths forward.”

The measure would boost clean energy deployment while allowing states to use their own domestic resources and “home-grown innovation and manufacturing” while keeping the United States competitive in the global energy market, he said.

The legislation would require the nation’s largest utilities to generate a percentage of their electricity from clean energy sources – including renewable energy, nuclear power, biomass, coal with carbon capture and sequestration, and natural gas – beginning in 2015.

During the first year, 8 percent of all utilities would be required to generate at least 24 percent of their power from clean energy sources, and that number would steadily increase by three percentage points each year through 2035, when energy companies would be required to generate 84 percent of their electricity from low-carbon sources. Utilities could meet the requirement by making incremental adjustments to their energy mix or by buying credits.

But despite the rollout, Bingaman again acknowledged that it may be difficult to move the legislation through Congress in such a thorny political climate.

Instead, Bingaman said he hopes to start a discussion on the idea of a CES by getting an updated analysis from the Energy Information Administration “on the facts of this proposal,” holding hearings on the legislation and eventually gauging whether the measure has enough support to move to the Senate floor.

“I don’t know if there will be [enough support], but we will go into it with optimism, and we hope during this process to concentrate, keep the attention on this proposal as a way to deal with some of our major national problems,” Bingaman said.

Sen. Lisa Murkowski of Alaska, the ranking Republican on the committee, has already criticized the measure. Robert Dillon, her spokesman, said market forces are already in place to move the utility sector to cheap natural gas, and a clean energy standard would only force utilities to buy expensive renewable power.

“We don’t think this is going anywhere, and frankly, we think it’s a waste of time and we should be working on policy that addresses high energy prices,” Dillon said. Republicans aren’t working on the measure and instead hope to work on a number of measures the chairman has held up in committee, he said.

Supporters of the legislation also seemed unsure of the bill’s chances of success during a news conference today.

Sen. Bernie Sanders (I-Vt.), one of the bill’s co-sponsors, hailed the measure as a way of reversing the damaging effects of climate change, bolstering the production of domestic clean energy and creating jobs, but he admitted the bill “is not perfect.”

Other co-sponsors include Democratic Sens. Ron Wyden of Oregon, Mark Udall of Colorado, Al Franken of Minnesota, Chris Coons of Delaware, John Kerry of Massachusetts, Sheldon Whitehouse of Rhode Island and Tom Udall of New Mexico.

Under the legislation, most municipal and cooperative utilities that sell less than 2 million megawatt-hours of electricity would be exempted from the standard, as would utilities in Alaska and Hawaii.

Bingaman’s staff said studies from the Energy Information Administration will confirm whether plants are in compliance in the first few years. The agency is expected to release a study on the language in coming weeks, he said.

Utilities would be allowed to comply with the standard by providing clean energy credits, making “alternative compliance payments” or using a combination of the two. The payments would start at 3 cents per kilowatt hour in 2015. The legislation would set a cap on the price of credits to curb volatility or price spikes, and all credits would be bought and sold on the open market.

Bingaman stressed that the bill would not cost the government anything to implement, and any money earned from the credits would be directed back to the states where it originated to support energy efficiency programs. He added that the measure wouldn’t affect energy prices during the first decade and that it would have “zero impact” on gross domestic product.

The legislation creates a long-term, stable policy that provides an incentive for companies to use low-carbon energy sources, said Bob Simon, the Democratic staff director for the Energy and Natural Resources Committee. Such a policy would be more stable than energy tax incentives that can come and go, he said.

EIA modeling efforts show the CES would reduce emissions in the power sector by nearly 20 percent in 2025 compared with a business-as-usual scenario and by 40 percent in 2035, according to Bingaman’s office.

The legislation would grant energy credits based on the amount of carbon dioxide emissions a plant emits. Specifically, generators that emit zero net carbon dioxide emissions – nuclear, hydropower and wind energy generators – would receive one full credit per megawatt-hour produced. Qualified waste-to-energy facilities would also receive the credit.

Generators that emit about 0.41 metric tons of carbon dioxide per megawatt-hour would receive half a credit per megawatt-hour. Coal plants that use carbon capture or storage or co-fire biomass would be awarded partial credits through the formula, based on the plant’s net emissions

Utilities would be able to deduct the amount of power sold from nuclear and hydropower plants placed into service before 1992 from their overall sales before calculating the percentage of clean energy needed for each year.

And notably, a utility that failed to meet the standard would be subject to penalties of 200 percent of the alternative compliance payment for each kilowatt-hour sold in violation of the standard. The Energy secretary could, however, waive those penalties if the utility was unable to comply for reasons outside its reasonable control.

The White House applauded the measure today as an important step toward meeting the president’s goal and doubling clean energy use by 2035.

“As the president has said consistently, a CES will drive innovation and investment in a range of clean energy sources – including renewables like wind and solar as well as nuclear, efficient natural gas and clean coal,” said White House spokesman Clark Stevens. “A CES will also help America remain a leader in the clean energy economy, with all the jobs that it will bring. We look forward to working with Congress as the bill moves forward.”

Clean energy groups and clean air advocates that worked on the legislation also hailed it as a success, but conservative groups showed more skepticism.

David Kreutzer, a research fellow in energy economics and climate change at the conservative Heritage Foundation, said that while the bill sounds less threatening than cap-and-trade legislation, “it can end up being pretty much the same thing” and likened the measure to “cap and trade lite.

Kreutzer said the bill would have same result as a stricter renewable energy standard, which would force the nation to produce more energy from more expensive sources.

“If these energy sources were cost-competitive, they would not need a government-guaranteed share of the electricity market,” Kreutzer said in a statement. “Including nuclear and coal with carbon capture merely expands the number of special interests looking for a bite of the subsidy pie.”

Even so, Rhone Resch, president and chief executive of the Solar Energy Industries Association, said the bill would remove market barriers for renewables and mirror successful programs on the state level.

Eileen Claussen, president of the Center for Climate and Energy Solutions, said 31 states already have similar clean energy goals, and Bingaman’s bill is a step toward boosting the financial and environmental benefits those programs have created.

“The bill builds on these state-level successes, President Obama’s call for a federal clean energy standard and earlier proposals from both sides of the aisle,” she said.

Joshua Freed, director of the clean energy program at the centrist Democratic think tank Third Way, said that Bingaman’s rollout and work on the issue brings the creation of a clean energy standard closer to reality than it’s ever been and that although Congress may not pass major energy legislation this year, Bingaman’s introduction paves the way for action in 2013 or 2014 if the political atmosphere in Washington, D.C., changes.